VICE CNO DESCRIBES SEQUESTER IMPACT ON NAVY PLANS

Cuts realign priorities in operations, maintenance and new procurement

It’s been a wild budgetary period since March, when deficit-busting federal cuts automatically kicked in and stripped $45 billion from the Pentagon’s spending for this fiscal year.

The U.S. Navy has proposed a $131.6 billion budget for 2014, down from $139.3 billion in 2013. But that doesn’t take into account next year’s share of the automatic cuts, known as the sequester.

Adm. Mark Ferguson, the Navy’s No. 2 officer as vice chief of naval operations, sat down with U-T San Diego last week to discuss the service’s finances.

Q: Congress passed a late March spending bill that gave the Navy a little more money in 2013 and more flexibility on how to spend it. Where are you now for 2013?

A: When Congress passed an appropriations act, what they did was two things: They gave us about $4.5 billion back into our operations and maintenance account. And they gave us the authorities we needed to start carrier and ship construction. (But) it left us with a shortfall of about $4 billion in operations and maintenance, and it left us down about $6 billion in our procurement accounts.

So we ended up prioritizing the forward-deployed forces to make sure they were ready to go. We made some adjustments, such as carrier deployments changing, some ship deployments were canceled, curtailed, and some were restored. We then spent the priority on preparing the FY14 next-to-deploy force. The next step would be to look at what kind of base operating things we could restore.

Q: What were the losers in the 2013 budget?

A: We canceled our Fleet Weeks in places we had to sail ships to go execute.

Q: You are not even hosting ship tours at San Diego Fleet Week, even though the vessels are already here.

A: I’ll let you talk to (Navy Southwest region commander) Rear Adm. Dixon Smith about that. But we’re not doing continental United States port visits. The Blue Angels have been (grounded) from their air shows for the year. Initially we had 33 ship (maintenance) availabilities to be done in private shipyards. We were able to restore 25 of those, so we’re only down eight. We’re looking at, can we move money this year to buy back the final eight.

At aviation depots, we couldn’t buy back all the engines and airframes that we want done. So there’s going to be an increased backlog.

On investments (in new equipment), we had to reduce quantities. We’re buying less — an E-2D, a P-8, some Broad-Area Maritime Surveillance (BAMS) unmanned aerial vehicles. Those quantities are reduced and we pushed them into the future.

Q: What’s the San Diego impact of the ship maintenance being partially funded again? Some of those maintenance contracts were at our shipyards.

A: There were 12 (ship maintenance appointments canceled) in San Diego. Eight are restored. Four are pending that we’re working to get them restored this year.

(His staff later supplied the ship names. The Princeton, Benfold, Pioneer, Russell, Sentry, Warrior, Sterett and Vandegrift will have maintenance. The Gridley, Rushmore, Sampson and Peleliu will wait to see if money becomes available.)

Q: What are the odds that will happen?

A: We’re optimistic we’ll get the authority to do it.

Q: Let’s talk about the 2014 Navy budget. Why did you not figure in sequestration in the proposal?

A: Our budget that we submitted is higher than the caps (imposed by the sequester). You have the president’s budget, which is at one level. You have the House and Senate budget acts, which are both different. If that’s not resolved, then we have to fall in line with the (sequester) caps. So you’ll see similar actions in FY14, which will be a reduction in operations, deferred maintenance and a delay in purchasing. And it’s really a matter for the administration and the Congress to sort out.

Q: It sounds like the budget pain in 2014 will look similar to 2013.

A: It really hinges on the actions of Congress, in terms of what budget level they give us. It’s a bit of uncertainty.

Q: Base closures: The Pentagon proposed them this year. Congress said no. Are they back on the table?

A: I’d say for the Navy particularly, we were pretty active in prior rounds of base closures. So we don’t think we have as large a challenge as other services might, but we still support having a base closure round.

Q: What’s San Diego’s vulnerability to base closures?

A: San Diego is our major hub on this coast. The way the base closure process works, we look at all the units we have here. Right now, we have 66 ships. If you look at the shipbuilding plan, we’re projected to grow in San Diego. In terms of the expectations, we’ll have to let the process go through, and it will look at what our plans are for how many ships, and it will make its decisions accordingly.